Institutional Theory and Organizational Change

Institutional Theory and Organizational Change

Staffan Furusten

Whether or not they are aware of it, managers do not fully control the nature and timing of their decisions. Their framework of action is limited by institutional constraints in the surrounding environment – what is technically, economically, socially and culturally possible in different contexts. With a better understanding of their environment – and how it affects how they think, what they do and why they do it – decision-makers are also better able to make more carefully considered decisions about organizational change. In this book Staffan Furusten discusses why it is difficult for organizations around the world to resist the pressures of the institutional environment and how organizations worldwide – big and small, private and public – are becoming increasingly alike.

Chapter 5: Societal trends

Staffan Furusten

Subjects: business and management, critical management studies, organisation studies, economics and finance, institutional economics


In this chapter, we take one step further out from the individual organization. I will argue that the institutional environment does not end at movements. Instead, I will show how even these are embedded in larger contexts, contexts that span time and space – that is, that cannot be attributed to a particular place or particular actors, or to a specific time when many people happen to do and say pretty much the same thing. I call these indirect elements in the environment ‘societal trends’. This should not be confused with how the concept of ‘trend’ is often used in everyday contexts, as a synonym for ‘fashion’. By ‘trend’ I do not mean that which in everyday language is called ‘trendy’. The concept of societal trend describes instead something that is long-lasting and deeply socialized in society. According to this definition, few things can be seen as true trends in the field of organization. The discussion in this chapter therefore concentrates primarily on the content of the societal trend that has dominated general Western thinking for the past 300 years, namely, modernity. More recent streams, such as post-modernity and post-bureaucracy, are therefore only briefly touched upon here since they cannot compare with the impact modernity has had in the formation of institutional environment products and directions of institutional movements. A first question that must be asked is how societal trends can influence organizational development. A follow-up question is whether it is necessary that the analysis stretches this far from individual organizations.

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